Amazon increasingly looks onto beating rivals on speed of delivery, significantly reducing delivery times for Prime members
Amazon.com, Inc. (NASDAQ:AMZN) has been reported to speed up its delivery processes for USB cables, cosmetics, smartphone screen protectors and other flat and small items. It is hoping to do so to increase pressure on the rival marketplaces that aid foreign suppliers and manufacturers in selling directly to the US consumers.
The e-commerce site further ensured that such items would now be easily delivered to the Prime members of the company within five business days. The delivery time is down compared to earlier delivery time of eight days. Also, delivery of inexpensive and small items in China has been made faster than that of other rivals including eBay Inc. (NASDAQ:EBAY), Alibaba Group Holding Ltd. (NYSE:BABA) and Wish.com. The delivery period of these rivals range from 15-30 days.
Amazon has used similar tactics earlier in the US market, which has helped it in gathering dominating market share in the online shopping segment. This has enabled it to increasingly differentiate from its competitors globally. Amazon has hoped on taking advantage of increased transactions in FY16. The transactions are expected to increase by 10% year-over-year and would reach $30 billion. However, the spokesman of the company failed to comment further.
This news came in after it reduced its shipping fees two months earlier for merchants who use its Small and Light program. This service enabled merchants to offer free shipping to customers whose bill is below $10 or less. Following this, former executive, Neil Ackerman stated: “I expect the small and light program to explode in volume.” It believes that other rivals would no longer be able to compete on its customer service or speed of delivery.
Furthermore, the Seattle-based business aims on continuously refining its delivery system. This would enable it to surpass rising competition from rival market places that have started helping Chinese markets to cater to the US market directly using e-Packet. E–Packet is a deal signed between China post and US post, providing cheap access to Chinese markets to the US consumer base especially for small package weighing at most 1.7 Kgs.
If consumers on Amazon use the service, the company would receive less money than it had achieved on its packing and delivery systems. Also, the sales would take longer delivery times than usual. However, using its own efforts, it can reduce the shipment time by encouraging delivery of items directly to its warehouses. Also, the items could be converted into Prime eligible category, meaning the products would be available at discounts for those who pay about $99 to Amazon on annual basis.
Furthermore, it would create a win-win situation for both merchants and consumers. For merchants, it can increase orders by speeding up delivery and for customers, the product would be more readily available and that too on discounts.
Following this, investors are highly bullish on the strategies of the company. The analysts at FactSet Fundamentals have provided the company with 31 Buy, six Overweight, and six Hold evaluations. The average target price is $885.89, with upside potential of 12.99% over the previous closing price of September 8.